How Much are Trustee Fees for a Larger Trust?

 In Revocable Trusts

Question:

My parents have a living trust. What is the trustee fee for an estate worth between $5 and $10 million dollars, where I have an account split between the two trusts and I did all the paperwork?

Professional trustee fees for larger trusts decline as a percentage of assets as the amount of funds under management increases. Annual fees for a $10 million trust fund will be much less as a percentage of assets than fees for a $1 million trust fund.
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Response:

Professional trustees generally charge an annual fee based on the amount of funds in the trust. Typically, this is between 0.8% and 1.2% of the funds under management for the first $2 million and then becomes a smaller percentage on amounts above $2 million. Though not all trust companies post their fee schedules on-line, here are a couple:

New Hampshire Trust Company:

  • 1.00% of the market value on the first $500,000
  • .80% on the next $500,000
  • .60% on the next $1,000,000
  • .45 % on the next $1,000,000
  • .35% on the balance

So, the annual fee for a $5 million trust would be $20,250 and for a $10 million trust would be $37,750.

Vanguard Trust Company publishes the following fee schedule:

  • .55% on the first $5 million
  • .30% on the next $5 million

So, the annual fee for a $5 million trust would be $27,500 and for a $10 million trust $42,500, just a little higher than the New Hampshire Trust Company. The fee schedule I found did not say whether Vanguard has a cut off for smaller trusts that it won’t take on or a minimum fee that makes it cost prohibitive for smaller trusts, but that wouldn’t surprise me.

In my experience, banks and trust companies are also willing to negotiate fees on larger trusts since they are generally more profitable to run than smaller trusts. It doesn’t take that much work manage a $5 million trust than a $500,000 trust. While the investments will undoubtedly be more complicated, the client contact and communication may be the same.

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